Disclaimer

The Property Council (including its Directors, officers, employees and agents) and the Allen Consulting Group do not guarantee the reliability, accuracy or completeness of any contents, information, data, projections or illustrative materials contained in the Our Nation model and its associated applications or components.

The Our Nation model (and all associated components) is a general guide and does not take account of the particular circumstances and needs of any person who may use it.

The Our Nation model (and its associated applications) are designed solely for the purpose of initiating debate about public policy issues. The Our Nation model (along with its associated applications and outputs) should not be used for commercial purposes.

The model is based on assumptions that will change and are subject to error and variation.

You should obtain independent advice from suitably qualified consultants and professionals before making any decisions in relation to the contents and outputs of the Our Nation model and its applications.

The Property Council, the Allen Consulting Group and any other consultant or professionals associated with the design of the Our Nation model (and its components) accept no responsibility for any claim, loss or damage of whatever nature suffered by any person or corporation or entity which relies or seeks to rely on any information, advice, opinion or implication arising from the use of this application, or otherwise given by the Property Council, the Allen Consulting Group or associated consultants or professionals.

Allen Consulting Group

The models that drive the Our Nation program have been prepared by the Allen Consulting Group for the Property Council of Australia.

No verification of the model outputs has been carried out by the Allen Consulting Group or any of their respective agents, directors, officers or employees, and the Allen Consulting Group and its agents, directors, officers and employees make no representation or warranty as to the accuracy, reliability or completeness of the information.

The results of the model may be unreliable in making projections and should not be used for commercial purposes.

Inherent Limitations

This model has been prepared in accordance with the requirements of Property Council of Australia. The services provided in connection with this engagement comprise an advisory engagement which is not subject to Australian Auditing Standards or Australian Standards on Review or Assurance Engagements, and consequently no opinions or conclusions intended to convey assurance have been expressed.

No warranty of completeness, accuracy or reliability is given in relation to the statements and representations made by the Allen Consulting Group.

The Allen Consulting Group has indicated the sources of the information provided. We have not sought to independently verify those sources unless otherwise specifically noted within the Our Nation model or its associated applications.

The Allen Consulting Group is under no obligation in any circumstance to update this model, in either oral or written form, for events occurring after the model has been issued in final form.

The findings of this model are subject to unavoidable statistical variation. While all care has been taken to ensure that statistical variations are minimised, care should be taken whenever using this information for whatever purpose.

This model only takes into account information available to Allen Consulting Group at the time of preparing the model and so its findings will be affected by new information.

Third Party Reliance

This model has been prepared at the request of the Property Council of Australia.

Other than our responsibility to the Property Council of Australia, neither the Allen Consulting Group nor any member or employee of the Allen Consulting Group undertakes responsibility arising in any way from reliance placed by a third party on this model. Any reliance placed is that party’s sole responsibility.

Copyright

The contents, output and design of the Our Nation model are copyright.

The Allen Consulting Group owns copyright to the intellectual property comprising the model.

The Property Council owns copyright of the Our Nation website, associated applications and output.

Except as permitted under the Copyright Act 1968 (Cth), no part of the Our Nation model, its output, contents or design may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic or otherwise, without the permission of the copyright owners.

These are adjusted over time, in a manner broadly consistent with the charts at ABS 3220.0 Population Projections Australia 2006 to 2101, Chapter 2 pp24, so as to give the life expectancy for a given year.

Age-specific Fertility rates

Total babies per woman data is taken from ABS 32220ds10_summary_statistics_2006-2101.xls

The age-specific fertility rates for Australia as a whole are then multiplied by the ratio of this total fertility to the Australian total.

Mortality

Life Expectancy at birth

Life expectancy at Birth is calculated from a city differential vs Australia as a whole multiplied by Australian life expectancy (differential data is sourced from ABS 3220.0 Population Projections Australia 2006 to 2101, Chapter 2, pp25.)

Age-specific mortality rates

The same approach as used for Australia as a whole has been used to calculate age-specific rates from the city life expectancy and the initial life tables.

Net internal Migration

It was found that the ACT and Darwin have, in the ABS projections, zero NIM, yet the age structure is such that the arrivals and departures needed to be separated. Especially for the ACT, there are significant inflows in the 20 – 24 age group, which are approximately reversed later in life, but not before contributing to population growth through increased births.

The model currently allows for four age/sex distribution methodologies, where a relevant methodology is selected for each city.

The four methods are:

Age/sex distribution as per the current year Australian population average. This method is independent of arrivals vs departures and depends only on the net figure.

Age/sex distribution as per the prior year population average for the city. This method is independent of arrivals vs departures and depends only on the net figure.

Historical data for age/sex distribution or arrivals and departures for the state in which the capital city lies.

Inferred net movement, where historical data for 2001 and 2006 population age/sex distributions, together with NOM data and fertility rate data for the period have been used together with mortality rate data to calculate inferred net movement by age and sex. These net movements are expressed as a % of total arrivals, which is estimated based on the overall net movement and a state average ratio of per capita departures per annum. This methodology has been used for the non-capital cities.

In case A, for the base projection for a capital city, the population distribution from the Australian base projection is used, and for the sensitivity capital city projection, the population distribution from the Australian sensitivity projection is used.

In case B, the base projection uses the population distribution from the prior year from the base population projection, and the sensitivity projection uses the population distribution from the prior year of the sensitivity projection.

Amount

ABS 32220ds10_summary_statistics_2006-2101.xls

Age/sex distribution

As discussed above, one of 4 distributions can be chosen.

Methods A and B are straightforward.

For method C, arrivals and departures for the state by age/sex for 06-07 to 08-09 (data sourced from ABS 34120dc003_200809) were averaged, and the age/sex distributions for each of the arrivals and departures were calculated from these averages.

Also, the average total Arrivals was assumed to be equal to the projected no. of arrivals, and the projected number of departures was calculated from this and the net figure (from the ABS projections)

As at 12/12/10, method C is selected for each capital city except Sydney, Melbourne and Adelaide, for which the model is set to method A (i.e. the current year Australian population distribution).

3. Non-Capital Cities

NOM

Amount

Average for the 3 years 2004 – 2006

Age/sex distribution

Same as for Australia

Age-specific Fertility rates

Differentials for Total Babies per woman data (capital city and balance-of-state) are taken from ABS 3220.0 Population Projections Australia 2006 to 2101, Chapter 2 and used with the Australian average to calculate the overall fertility rate.

The Age-specific Fertility rates for Australia as a whole are then multiplied by the ratio of this total fertility to the Australian total.

Mortality

Life Expectancy at birth

As per capital Cities.

Age-specific mortality rates

As per capital Cities.

Net internal Migration

Refer to the descriptions of Method D under Capital Cities. That methodology was used to calculate overall NIM for each city and the age/sex distribution for the period 2001 - 2006. These have been assumed to remain constant.

Amount

Refer to the above; assumed constant equal to the 2001 - 2006 inferred average

Age/sex distribution

As discussed above, one of 4 distributions can be chosen, but always Method D is used for non-capital cities. The age/sex distribution is assumed to remain the same as the inferred one for the period 2001-2006.

4. Cities/Regions excluded

Canberra-Queanbeyan (ACT/NSW)

As this statistical division predominately overlaps the Canberra/ACT division, Queanbeyan has been excluded from the cities/regions considered in the model. To include it would mean that the majority of the populations in these 2 regions would be double-counted in any sum-of-all cities calculations, and hence excluded from the implied "Balance of Country" calculation.

Bathurst/Orange (ACT/NSW)

At first, calculations for this combined area were included. In particular, an attempt to apply the calculation methodology described in D above was made in order to calculate NIM. However, the relevant 2001 census data includes this one combined region, having a total population of 73,199. On the other hand, the 2006 census data has separate divisions for Bathurst and Orange, which have a combined population of 66,085. It appears that these opening and closing population figures are inconsistent (that the areas included do not match). The calculation method gave a significant NIM outflow which appears to be inaccurate because of this discrepancy. Hence this region has been excluded from the current version of the model.

5. General Outline of Population Projection Calculations

The population P(y,n,s) for a region (including the whole of Australia) in year y of age n and gender s is in general given by the formula

Where A and B are constants (=0.5) and M(y,n,s) is the age-specific mortality rate for persons of gender s and of age n in year y.

For n=0, D(y,n,s) is calculated as above but where the term P(y-1,n-1,s) is replaced by B(y,0,s).

For n=100, D(y,n,s) is calculated as above but where the summand includes both P(y-1,100-1,s) and P(y-1,100,s).

Missing methodological parameters:

Fiscal

The Fiscal calculations are based on the Intergenerational Report (IGR) (2010). Effectively, the model solves for expenditure per person (per age group) on a range of expenditure items, including health, education and age pensions. It also solves for GDP per capita, and tax per worker – and all of these items are benchmarked to the IGR. As the migration slider is moved, the budget position changes reflecting the different tax and expenditure per worker.

Indexing - comparisons between locales

Indexes have been created to present a better guide as to rates of change rather than absolute growth. For example, even though the Gold Coast is growing more rapidly than Sydney, absolute growth numbers do not demonstrate this so indices have been created. Indices, with 2011 as the base year provide a convenient way to compare growth rates across locales.

League tables

The league tables, using both absolute and indexed measures to compare growth across locales. The indices which measure the ‘time taken to add an extra unit’ of ‘x,’ are accurate for 2011 values.

Indicators

Growth in Tax per worker

Growth in Tax per worker

Growth in real wages is based on productivity growth of 1.6 per cent which is the long run average growth rate for the period 1980-2010. This is in line with the labour productivity assumptions adopted in the Treasury's 2010 Third Intergenerational Report (IGR 2010).

Population

Population Pyramids

A population pyramid is a graphical distribution of a populations age and gender breakdown, used by many including the ABS (as display options for series 3201.0 and 3222.0).

The population pyramids are based on the outputs from the population calculations. Using mortality, fertility, NIM and NOM data that is benchmarked to the ABS, the model traces age cohorts over time.

These population pyramids are graphical representations of these cohorts by locale over time.

Schools

Childcare

DEEWR (unpublished); table 3A.2.

Ratios of children attending government approved child care facilities are determined for each age between 0 to 5 years by state (and for Australia) based unpublished DEEWR.

These ratios are multiplied against relevant projected population ages by locale.

Schools

The model is based on the number of students as a percentage of 5 to 18 years olds, based on ABS series. Relevant ratios by state (and for Australia in total) are used then applied to population projections. Results are divided into typical class room sizes (derived from OECD data, representing the average classroom size for primary and secondary schools).

Households

Households

The Allen Consulting Group has determined household size for each state from 2011 to 2050. These figures are then divided into the modelled estimates for population to get a total number of households for a particular region. All cities within a state are assumed to have a homogenous household size.

Aged Care

The model determines shares of aged care residents (including respite residents) by sex for five year intervals between 65 years of age to 95 years (as well as estimates for under 65 and 95+ cohorts) as a proportion of relevant population band by states (and for Australia).

These ratios are multiplied by projected population and aggregated for all locales.

Resources

Passenger Car Travel

The model predicts traffic growth in vehicle kilometres travelled as a function of real GDP
per capita by state (and Australia), assuming BTRE’s 2.7% estimate.

The algorithm used to determine this dynamic is illustrated below.

This figure is multiplied against population projections by state and for Australia.

Constants in Logistics Curve

Shift

10

b1

0.13

A

-6.5

B

15.5

e

2.718281828

X (= Real GDP index)

0

5

10

15

20

25

30

35

40

45

50

55

60

Fn = B/(1 + e^- (b1(X-shift))) + A

-3.180

-1.184

1.250

3.684

5.680

7.069

7.928

8.421

8.692

8.838

8.915

8.955

8.977

Energy

Source: ACG

The Allen Consulting Group has determined per capita energy consumption per annum assuming changes in energy use by state (and Australia) for each year to 2050 based on the Allen Consulting Groups energy

Demand model. The energy demand model projects, using ABS data the sectoral demands for energy into the future. It includes the impact of all legislated policies – so at this stage, it accounts for the Renewable Energy Target (RET), but not the Carbon Price Mechanism (CPM).

The model then multiples these estimates by projected population by state and in aggregate for Australia.

Water

Source: Household water consumption (kL), per capita, 2008-09

Source: ABS 4610.0, table 1.2

ABS water consumption per capita is multiplied by projected population.

Employment

Retail Space

Source: Urbis and standard industry ratios.

The model assumes 2.1 square metres of retail space per capita. The model then multiples this figure against projected population by state and in aggregate for Australia.

Office Space

Source: Allen Consulting Group “Employment Share by State and Industry” projections and standard industry workspace ratios.

The ACG model estimates office employment as a percentage of working age population by state (both capital city and balance of state).

It then determines growth rates of office employment shares for each year to 2050

The model assumes 21 square metres of office space per office worker.

The number of derived office workers are multiplied by this workspace ratio to calculate office space in square metres by locale.

Dependency

Total Dependency Ratio

Two types of dependency ratio are determined:

Dependency ratio: the number of people over 65 years of age as a proportion of people
between 15 and 65 inclusive, expressed as a percentage.

Total dependency ratio: the number of people over 65 years and under 15 years of age as a
proportion of people between 15 and 65 inclusive, expressed as a percentage.

These ratios are derived from the model’s population projections.

About

Our Nation App

Welcome to Our Nation – Australia on the Move

Our Nation generates scenarios based on economic and demographic trend data modelled by the Allen Consulting Group for the Property Council of Australia.

Our goal is to promote discussion about Australia’s potential futures.

This is version 2.0 of the model. In many ways it is the beta version of a far more powerful tool that will develop in future years.

We welcome your feedback (positive and negative) about the model’s methodologies and assumptions, scope and user interface.

If you’d like to partner with us to further develop Our Nation, please click on the feedback link.

Here is a quick summary of Our Nation:

goals

what does Our Nation do?

assumptions

data sources

limitations

further research

contacting us

Goals

Our Nation aims to further stimulate discussions about short, medium and long-term prospects for Australian communities.

By better understanding population growth and settlement patterns, we can examine potential scenarios of demand for community services and supporting infrastructure.

We can also explore the implications of critical trends in ageing, labour force growth and dependency ratios as well as the potential impact on Australia’s longer term fiscal capacity – our collective ability to finance evolving community needs.

There are many perspectives on these issues.

Our Nation will spur debate on our assumptions and model methodologies, which we welcome.

A longer term outlook will also prompt discussions about the direction of public policy and important concepts, such as sustainability, and the role of the private sector in a mixed market economy.

What Does the Our Nation App Do?

Our Nation is an open source app that operates from a website and mobile devices.

Our Nation examines:

the potential size of Australia’s population;

possible settlement patterns of Australians across 41 major cities and towns (of more than 30,000 people);

software demands – the basic demand for essential community services, such as housing, schooling, child care, health, aged care, retirement living, energy, water and transport, as well as office and retail space

hardware demands – indicators of the infrastructure required to deliver essential community services

Immigration – users can change the annual net overseas migration assumption using a slider at the side of the screen (please note that, at this stage, a single figure is applied to the selected future time period);

Time Frame – users can select a continuous forecast period between 2011 and 2050;

Multiple cities – users can combine locales when forecasting absolute numbers by various indicators, as well as selecting individual locales, all capital cities or all of Australia (which includes cities under 30,000 people).

Finally, Our Nation will include articles that analyse interesting features of the model outputs.

In the future, we intend to add a blog site that will encourage user –initiated comments on the Our Nation methodology and outputs.

Abbreviations

CAGR: Compound Annual Growth Rate

TGR: Total Growth Rate

Data Sources and Assumptions

As far as possible, Our Nation draws on ABS data.

It also utilises methodologies employed in the Commonwealth Treasury in its most recent Intergenerational Report.

For some metrics, such as office and retail space needs, the model draws on private sector experience.

An explanation of the methodologies employed in Our Nation are provided in the assumptions section of this website.

Limitations

Models of the future are inherently risky

The world can change in unforeseen ways and, sometimes, a small shift in basic assumptions can have a big impact on the outputs produced by models.

Some commentators are dubious of models driven by demographic dynamics.

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